Bid Goodbye to Wallets: Mobile Payments are the Future!

Why Near Field Communication (NFC) spells the new wave for money transactions in India

India is very different in terms of demographics as compared to its western counterparts. Its retail industry is highly disorganized and its significant presence in rural India makes it very different in terms of the prevalent shopping and payment culture. The cashless modes of payment like credit cards, debit cards, etc. which have done extremely well in the developed countries appeal to only a small section of the ecosystem in India and therefore might not be as successful here. Developed countries have moved from cash to cards and are now progressing to mobile payments, whereas India’s unbanked customers and merchants can take advantage of mobile payments and can move directly to the same.

Why it’s time for payments to go ‘mobile’

There is a significant gap left by the present mode of transactions which can be rectified by a solution which has mass appeal. The mobile is arguably an ideal mode for bridging this chasm. It is an innovative solution that has the capacity to capture the large USD 410 billion retail market in India, expected to grow to $1 trillion by 2020 *(Figures as predicted by PricewaterhouseCoopers PwC in a report titled ‘The Future of India: The Winning Leap’)*. It meets all the prerequisites of the ecosystem players like consumers, merchants and banks. The induction of new payment modes in the Indian setting in future would be exciting to witness as the current payment modes in our marketplace offer large opportunity for such innovations. Industry players who make an effort to fill this gap considering the distinctiveness of the Indian market will not only raise the yardstick for their brands but also for the payment ecosystem.

The year 2014 witnessed a revolution in the field of mobile payments. Last year gave the masses a lot to play for in the payment space. Brands like Square, Apple, Google, Samsung and Microsoft have become major players in the Mobile Wallet space and MNOs, Banks, and institutions were constantly innovating to ensure they were not left behind in the race. Last year, the digital wallet ecosystem witnessed standardization and interoperability emerged as the key to mobile wallet scalability. It also focused on the complete buying experience of the customers. It thrived on geo-fencing and many other programs designed to connect to the targeted consumers with the right offers. These helped in creating a new shopping culture and improve customers’ in-store and point-of-payment experience. It also saw a change in the approach of the retailers in terms of marketing, advertising and the buying habits of consumers. All these innovations in turn led them to concentrate on protecting and securing the m-commerce space.

Mobile technology green lights the non-cash payment revolution

The progression in the Indian mobile phone sector over the past few years has been phenomenal. Mobile as a device has become an inescapable entity in all dimensions of our day-to-day life, and has superseded television that till date has been the most important tool in terms of reach and influencing the masses. There is a huge potential in the Indian market for transitioning towards effective non-cash payment instruments. The evolving regulatory framework is directly connected to the future of effective non-cash payment along with the innovative payment solutions that have come to the forefront.

The year 2015 has shown signs of encouragement for the future of near field communication. It was expensive for the retailers to upgrade their hardware in the midst of average to lukewarm consumer demand earlier. In 2015, the infrastructure needed for NFC to succeed is expected to scale more rapidly.

More and more companies are taking interest in developing the technology to attract consumers to use NFC. They have understood that they need something extra to push them to start using their mobile phone to pay in-store in the form of loyalty or offers integration. Customers need to realize the significance of the technology. This revolution is similar to what television did for us almost a century ago.

According to a recent report by IDC financial insights, it has been predicted that the global value of proximity payments, both Near Field Communication (NFC or tap-and-pay) and mobile bar-code transactions, will reach $296 billion by 2017. Despite the buzz created by the launch of Apple pay, the story remained limited to the US as it was unavailable worldwide. This is mostly because Android is the most widely used platform and the iOS smart consumer is highly segmented in countries like ours. It’s very evident that with Tap-and-pay initiatives by Apple and Google, NFC will become the future of mobile payments worldwide. It also makes more sense for an emerging market like India to bank its financial transactions on the Tap-and-pay initiative as most of the transactions in the country amount to less than Rs. 2000 transactions.

The recent aggressive and innovative initiatives by the Reserve Bank of India in the mobile payments segment, paves the way for the easy penetration of mobile payments. This progression requires a combination of retailers and smartphone users to make the move towards NFC. The new wave of mobile payments is here and even while moving at a pace that may be gradual, it certainly cannot be ignored in the near future.

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